RE Recovery Causes Spike In Permits For VPO Home Sales In Madrid

16 October 2017 – Cinco Días

The recovery of the real estate market is consolidating to reach every segment and type of home; and social housing properties (VPO) are no exception. In the statistics published by Spain’s National Institute of Statistics (INE) each month, we can see that VPO properties account for between 7% and 9% of all transactions. That figure is higher in the Community of Madrid, given that the authorities in that region are seeing that the number of permits to sell these kinds of homes, which are subject to a specific legal framework, are soaring.

Since social housing properties are allocated to families with fewer resources, they have always been associated with lower prices, when such families do not receive any additional help, and moderate prices, when the families also receive direct subsidies, plus the possibility of financing them with so-called subsidised loans, those that accrue interest at a lower rate than charged in the free market.

For this reason, and to avoid owners from speculating with homes that are made available to them thanks to public funds, the law offers two options to anyone wanting to sell a VPO home.

The first requires the owner to request permission to sell the home, but, in that case, the maximum price is assigned by the regional authorities, on the basis of the size of the home and its location (…).

In Madrid, during the boom years, the price difference between a private home and a VPO property reached 30% on average. Nevertheless, the burst of the bubble caused that difference to reduce, to the point that in some neighbourhoods of the capital and in several towns in the region, the prices of private and social housing homes ended up being the same (…).

That price difference is key for choosing the second option in the event of a sale. If an owner considers that he can sell his VPO home at a significantly higher price than the level set by the autonomous government, then he can request that his home be disqualified. The process is not easy, owners need to follow several procedures, which are somewhat tedious, but the advantage is that if all the requirements are fulfilled, then the Administration grants the disqualification without any problem.

The price rises in Madrid, one of the regions where houses are appreciating by the most, is encouraging both those who want to sell their VPO homes at an appraisal price, as well as those who prefer to do so without any obstacles in the free market (…).

In this context, sources at the Ministry of Transport, Infrastructure and Housing in Madrid have seen how permits to sell VPO homes have soared by 30% in the last two years and how the number of requests to disqualify homes has increased by 21% (…).

Finally, according to José María García, the Director-General for Housing in the Community of Madrid, trying to sell a home without the corresponding permit or for a price that exceeds the appraisal price may result in the imposition of fines amounting to between €6,000 and €60,000.

Original story: Cinco Días (by Raquel Díaz Guijarro)

Translation: Carmel Drake